3 FTSE 100 dividend stocks to buy in a recession

I am concerned that this year’s recession could have a major impact on my stock market portfolio. However, with inflation running at 10.7%, keeping cash in a savings account isn’t fun for me. However, I prefer to buy defensive dividend stocks that can provide a passive income stream.

Here are three FTSE 100 dividend stocks I consider buying in an economic downturn.

BAE system

2022 is an incredible year for BAE system (LSE: BA.). BAE’s share price rose 54%.

What’s more, sports defense stocks yield a 3% dividend.

The war in Ukraine has led to an increase in the European defense budget. As Europe’s largest defense contractor, BAE Systems is well positioned to benefit if geopolitical tensions continue in 2023.

Any boost to the company’s order book will increase demand from long-term projects with the US, UK, Saudi Arabia, and Australia.

The company has a large backlog of orders and a dividend cap of about twice its underlying earnings. Therefore, I am optimistic that the business will be a useful passive income generator in the coming year, despite the contract economy.

However, I will understand that a deep recession around the world could cause the government’s main customers to cut their defense budgets. Possible austerity measures could damage the company’s growth prospects, depending on the severity.

Experience

Experience Shares (LSE: EXPN ) fell 23%.

The company’s dividend yield is an unremarkable 1.6%, but I still think the consumer credit reporter is a good dividend stock for me to buy in a difficult economic climate.

In 2022, Barclays Experian tips are resilient “but not immune” into recession. In particular, analysts noted the business “Surviving the recession caused by credit and Covid-19 without reducing organic profits“.

Interestingly, portfolio manager Nick Train – dubbed the ‘British Warren Buffett’ – added to Experian’s holdings last year. I think he could be something.

One of the interesting features for me is the company’s emerging market exposure. New product launches in Brazil contributed to 18% organic revenue growth in Latin America for H1 2022, making it the best performing region in the group.

However, Experian’s share price faces headwinds from the UK’s housing market slowdown. If demand for mortgages declines, demand for credit reporting services may also decline. I am ready to take this risk for the geographic diversification that the stock offers.

Glencore

Glencore (LSE: GLEN) shares significantly outperformed the FTSE 100 index last year, posting a 44% gain.

The Swiss-based commodity trading and mining company returned 4%.

Despite his stellar performance in recent years, the commodity giant still looks pretty valuable to me. The forward price-to-earnings ratio is less than five.

Additionally, a 62% reduction in net debt and a 119% increase in adjusted EBITDA for H1 2022 support signs of a financially healthy company.

Driven by rising demand for electric vehicle batteries, businesses expect cobalt and nickel production to rise until 2025. I think this increases the attractiveness of long-term investment.

However, the company was recently hit with a £280m fine from a Serious Fraud Office investigation into various bribery schemes in Africa.

Although not enough to dissuade me from investing, I would like to see improvements in Glencore’s culture to ensure legal problems do not derail the stock’s positive trajectory.